RMI CEO Herman Bosman: The venture is an investment to target the UK home insurance market.
Rand Merchant Investment Holdings (RMI) has announced a joint venture with OUTsurance and Nordic insurance group Sampo to acquire the remaining stake of UK auto insurance group Hastings Group Holdings for £1.66 billion (R37.53 billion).
RMI CEO and CFO, and CFO Awards judge, Herman Bosman said in a statement that the group decided on the transaction as a strategic long-term investment to target the home insurance market in the UK. He said RMI believed Hastings was able to show new business growth of 10 percent and its current improving client retention rates could grow that market share beyond that current 7 percent, adding that Hastings had barely penetrated the UK home insurance market.
The transaction will be housed in a new company, Dorset Bidco, which Herman said would make a cash offer to acquire Hastings shares at 250 pence each, while Hastings shareholders would also receive 4.5 pence interim dividend. “RMI and OUTsurance will then acquire a further 0.3 percent interest in Hastings for £5.3million, taking their stake to 30 percent, leaving Sampo with a 70 percent shareholding.”
RMI and OUTsurance would have an option to increase their stake up to 40percent within 18 months. “At the moment, we feel we have an influential seat at the table with Sampo,” Herman said.
He added that, although they would not directly interfere in Hastings management, there were areas where RMI, OUTsurance and Sampo could add value to the business.
